Law Technology Today From the ABA Legal Technology Resource Center
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In today’s hyper-convenient and connected world, clients can shop for a near-limitless selection of items—from anywhere, anytime. They can consume a diverse range of content in a few quick clicks. And they can communicate with service providers through channels of their choice.
This expectation of ease is no different for the legal industry, especially when it comes to making payments. Today’s clients want—or rather, they expect—to have choice. One way to give them the flexibility they’re after is to accept ACH payments: The most preferred B2B payment method in North America. Below we cover everything you need to know about these payments, from how to accept them to their perks and pitfalls.
What is an ACH payment?
ACH (which stands for automated clearing house) payments are a type of electronic or digital payment between two bank accounts. They’re made through an ACH network, which is governed by an organization called Nacha. This highly impressive network safely and securely processes some 29 billion electronic payments for consumers, businesses, and government agencies each year.
What is an example of an ACH payment?
While the term may not be part of your everyday lexicon, ACH payments are ubiquitous in our lives. If your paycheck automatically appears in your bank account through direct deposit, that’s an ACH payment. If you’ve recently set up bill autopayments on a recurring basis, that’s yet another example of these payments at work.
Why should your law firm accept them?
If you’re already accepting a variety of payment methods, you may be wondering why you need to add another one to the mix. Well, ACH payments can bring a host of benefits, including:
- Greater efficiency. With traditional checks, clients have to make time-consuming trips to the post office or law firm to drop off their payment—and then legal professionals have to take time out of their day to process it. ACH allows money to be transferred in just a few clicks, saving time for lawyers and clients.
- Increased revenue. Clio’s 2021 Legal Trends Report found that the average lawyer billed less than three hours of an eight-hour day. By spending less time on administrative tasks—such as making or processing payments—lawyers can increase their billable hours and boost their revenue. The ease and flexibility of ACH payments also helps lawyers collect more money. And as processing fees are typically lower, they’ll save money on those.
- Enhanced client experiences. Clients appreciate the better experience ACH payments deliver—and this translates into more repeat business, better word of mouth and online reviews, and additional referrals.
Advantages for clients
Along with unlocking benefits for lawyers, ACH payments can provide clients with:
- Added convenience. Clients can pay whenever and wherever they want, without wasting time dropping off payments. This is especially helpful for recurring bills.
- More security. As ACH payments are governed by the Nacha Operating Rules, clients can be confident that their payment will arrive online and on time.
- An environmentally-friendly option. According to an Edelman study, 60% of people want to buy from companies that are helping to make the world a better place. Reducing paper usage is a simple way to help clients build a stronger connection with your brand.
Risks to know
It’s impossible to guarantee a 100% risk-free transaction. That’s why it’s important to be aware of the potential threats so you can verify that your payment provider is set up to mitigate them.
- Unlike credit card payments, ACH payments aren’t governed by PCI compliance. While the ACH Network offers comparable internal controls, data breaches or data losses are possible.
- According to Corporate Compliance Insights, payment fraud and ID theft could wreak havoc on your firm—yet the risk is low with ACH.
- While system downtime is rare, it can delay payments when it happens.
How can your firm accept them?
Adding a new process to your law firm can feel intimidating. But the good news is that it’s easy to get started with ACH payments. We recommend the following steps:
- Confirm it’s right for you. For instance, ACH payments aren’t available to people outside of the US.
- Choose a provider. We recommend one that specializes in law firm payment processing, as they’ll understand industry requirements and have the checks and balances in place to ensure compliance.
- Set up the back end. ACH payment setup is simple and all done online, so there’s no need to deal with hardware. You can also add payment instructions to invoices and online payment options.
- Gain authorization. A good platform will allow you to receive authorization from clients and suppliers in a few quick steps.
How to accept payments securely
Client confidentiality and regulatory compliance are among the most critical aspects for your law firm. Any payment method you offer, as well as the platform you choose to power it, must be secure and meet compliance requirements. Fortunately, ACH payments are low-risk on both fronts.
Still, it’s a good idea to confirm that the platform you choose is PCI compliant. Although these payments don’t need to follow PCI-compliant standards, it’s a good indicator of a provider’s commitment to security.
How do ACH payments compare to other payment methods?
Below, we look at some of the pros and cons of ACH payments, compared to more traditional payment methods.
ACH payments versus credit cards: ACH payments take the convenience of remote, cashless credit card payments to the next level, with two main distinctions. For one, ACH offers lower fees than credit cards. Secondly, while credit cards inform you instantly whether there are enough funds for a transaction, it takes one to three days with ACH payments.
ACH payments versus wire transfers: ACH offers lower fees than wire transfers and allows you to easily cancel transactions. However, these transactions can only be done in the US and can take up to three days, while wire transfers are global and are processed immediately.
ACH payments versus checks: Paper checks offer lower transaction fees, but there are drawbacks. Payers who don’t have enough money in their account to complete the transaction via check might be charged a fine, which doesn’t happen with ACH. Checks also have a negative environmental impact and lack the convenience that ACH delivers.
How much do ACH payments cost?
You’re probably wondering how much this new system will cost your law firm. According to Merchant Maverick, you can expect a flat $0.20-$1.50 fee per transaction, a 0.5-1.5% fee per transaction, or a combination of the two. Unlike credit card transactions, many providers place a cap on ACH fees—which tends to be around $5. This makes ACH payments very cost effective for lawyers.
There are additional fees you need to take into consideration, as outlined below.
Source: Merchant Maverick via GoCardless
A powerful addition
With their many benefits, ACH payments are growing in popularity among clients. With plenty of tools in the market, the daunting task of figuring out how to accept these payments becomes an easy one. Platforms like Clio specialize in the legal industry, so you can collect more payments, get paid faster, and still remain ethical and compliant.
This doesn’t mean you need to throw all other payment methods out the window. Many clients still use credit cards, wire transfers, and checks. When you expand your digital billing options, you give them the flexibility they’re after—which makes getting paid easier.